🔋Toyota Trouble
Toyota could fall victim to the new EV paradigm or maintain its market share in a resource constrained world where ICE vehicles still exist.
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Electric vehicles are hot right now. With the success and profitability of Tesla, increasing EV sales around the world, government funding with the Inflation Reduction Act (IRA), and aggressive EV targets from the government and automakers, the switch from internal combustion engine (ICE) to electric vehicles (EV) seems like an inevitability going into the next decade.
Not all automakers share the enthusiasm. Toyota is less on the EV hype train as other autos with an EV goal of 35% instead of the 50% that others have. Many believe that the company is in deep trouble, poised to face economic disaster in a new paradigm of electric vehicles. EVs are gaining increasing amounts of new vehicle sales and with their inadequate line of full electric vehicles, they could get left behind in a hurry. For example in Germany, Toyota has lost ~1/3 of their market due to there limited offerings of EVs.


Are Germany and the UK really model economies right now? They were in energy crisis last year and have done little to solve the underlying issues. Here’s an example of the UK just last week asking homeowners to reduce electricity usage. People in some of the most advanced nations in the world are being asked by their governments to turn the lights off.

Toyota announced that their longstanding CEO is stepping down in April and correspondingly that they will build out a dedicated EV production platform. This is quite late compared to many of there competitors and why they are behind in terms of EVs. Their year over year sales of EV/PHEV are dismal compared to other autos currently. Keep in mind that these numbers are easier to reach at smaller scales. With more and more cars being sold, the ability to keep increasing growth of EVs gets harder.
It isn’t like Toyota is just sitting on their hands though, they announced recently a multi-billion dollar investment into a battery factory in North Carolina in the US which will also help them take advantage of IRA incentives in addition to domestic (Japanese) battery infrastructure. Toyota has also been filing patents like crazy for solid-state batteries, one of the next gen battery technologies. Regardless of their perceived sluggishness, the company is competitive with battery factories and research.
Currently Toyota has one EV model (BZ4X) and two PHEV models (Rav4 Prime and Prius Prime) however the BZ4X has faced criticism and large costs. They have a line of future EVs in the lineup and another PHEV. Toyota has the highest (10%) US market share and is a top automaker in many top countries.
I think ICE vehicles are not likely to be forgotten as fast as many EV enthusiasts believe. Nissan is now positioned similarly to Toyota and has faced similar criticism. Some people think that the new EV technology is just better, and ICE vehicles will simply be left to the wayside. I think this is naïve, especially in the timeframe of just 7 years from now.
It is easy to say now amidst the EV craze that Toyota is making a huge mistake. Will they miss the paradigm shift ahead and go under or are they looking two steps ahead and seeing issues with the EV revolution. Or are they just slow to react and perhaps will catch a break if EV adoption isn’t the mad scramble as predicted.
I’m not going to say we’re in a bubble in EVs. They certainly will and should still grow, but when there’s too much hype about something, things tend to give. The government has placed extraordinary EV targets of 50% of new cars by 2030 on automakers which will for sure cause major market disruptions this decade. Material limitations in lithium and other metals will be a serious burden to the industry. Furthermore, the cost of batteries must continue to decrease in order for EVs to even reach cost parity with ICE vehicles. Charging infrastructure is another key area that has to keep up with the volume of new EVs and electricity demand.
I actually think Toyota is in a unique position to fill a critical need in the coming years. Their line of quality PHEVs is unmatched by other companies and if commodity prices, material shortages, and charging infrastructure shortages do continue to be issues this decade, then Toyota stands to benefit and actually do more to solve emissions issues in the process than some of the other more aggressive companies by being able to sell more cars with batteries through PHEVs. They may miss some revenue on EVs in the short term, but their slow and steady investments into batteries/EVs and quality PHEVs on the market could prove to be a solid long-term/market-driven play not catalyzed by fear of missing out on a trend with government intervention, but we shall see.
Let me know what you think. Will Toyota get left behind, or will they continue to be a strong competitor through 2030?
-Grayson
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There is a dramatic difference between the two. The paint shop is the same, but not much else.
Elon musk has said one of the biggest mistakes they made was buying an ice vehicle plant in California and trying to modify it for electric vehicles. it ended up costing more than a new EV plant, and could never be as efficient as a ground up EV plant. EV production differs even more dramatically now. You can save up to 40% of your labor costs with a properly designed EV plant versus a plant built around ice vehicles.
Ice vehicle plants generally start with an enclosed unibody design and have to get everything in the car through the side door openings. Of course the engine goes into the engine bay from the top, and all the wiring cooling etc meets up there. You raise things up to put transmission underneath, and have things low to engine in from the top, and need access from bottom & top to mate the two.
EV is a skate board design. All the keys stuff goes on a flat open platform. Motors, electronics, wiring and batteries. Ideally, the skateboard is made up of three main parts, the front and rear are cast pieces connected by a mid portion structural battery pack. Seats are installed on the platform, then an open bottom unibody from above is married to the skateboard.
A true EV will have a large frunk. If it does not have one, it is a modified ICE vehicle, built on an ICE production line.
Toyota is in much bigger trouble than you suggest. This is why their CEO just fell on his sword and resigned, reaching to his grandson to take over the company, saying he had lost touch.  Their only EV, the BZ4X, is not a true EV at all but rather a modified ice vehicle. it is built on an ice production line. They won’t have a true EV for at least three years.  They wasted too much time on hydrogen, which would never make sense in a consumer vehicle. The time for hybrids has passed.